Any big, massive deal on raising the debt ceiling that Barack Obama may have entertained seems dead as a door knob today. Sunday′s meeting at the White House between Obama, and GOP and Democrat leaders from both the House and Senate lasted only 75 minutes. A proposed $4 Trillion dollar deficit reduction over 12 years that Obama wanted to be paid for with a balanced approach of half spending cuts and half tax increases is going nowhere. House Speaker John Boehner has made it abundantly clear that no deal calling for increases in tax rates will pass the House. Boehner and Senate Minority Leader Mitch McConnell are back to talking about going with a smaller deal based on the last Joe Biden debt limit talks, which calls for $2 Trillion in spending cuts. About half come from discretionary spending and the rest from savings once U.S. troops are withdrawn from Iraq and Afghanistan.
Under the Obama plan, the debt limit would be increased some $2.4 Trillion dollars, basically enough wiggle room to allow Obama to keep his current levels of budget deficits through the 2012 election cycle. Under the downsized deal that Boehner and McConnell are proposing, the debt ceiling would only be increased about $1 Trillion dollars, barely 10 months worth of Obama budget deficits. This would make the debt limit an issue again next year as the political campaigns are in full swing.
While Obama supporters in the Media are describing this as another sign of Washington politicians failing to do ″big things″ and just ″kicking the can down the road″, for Republicans this would be a success. The GOP is motivated to limit Obama′s spending as much as possible and whittle away at budget deficits. Not to mention remain committed to not raising tax rates. Boehner and the House Republicans will most likely fashion a bill this week for a vote that will adopt the ′small deal′ approach, then pass it on to the Senate. There will undoubtedly be some compromise worked out between the House and Senate before going to the White House for Obama to sign.
Barack Obama will make another speech today at 11am to discuss the debt ceiling talks before they resume this afternoon. John Boehner and Mitch McConnell are standing firm on not increasing tax rates in order to raise the debt limit. The ′big deal′ Obama had hoped for won′t happen and he′ll be lucky to get a smaller deal based on the spending cuts proposed during the old Joe Biden debt talks. With the deadline of August 2 approaching, Congress needs to have a bill on the floor by July 22 at the latest.